Chapter 15: Texas Rules for Life Only

Question 1

_____ are responsible for the form and content of all advertisements.

Answer 1

Insurers

Question 2

TF; Advertising = Dividends NOT Guaranteed

Answer 2

True

Question 3

Life insurance advertisements may not make an unfair or incomplete _____ of policies, benefits, dividends, or rates. If an advertisement contains a _______ (Same) of policies from different insurers, the advertisement must prominently state:

“The description of the other insurance company’s policy was not furnished by that insurance company. If there are questions regarding the illustration, please contact a representative of the other insurance company.”

Answer 3

Comparison

Question 4

TF: Testimonials, appraisals, and analyses used in advertisements must conform to the following requirements:

They must be genuine;
They must represent the current opinion of the author;
They must be applicable to the policy advertised; and
They must be accurately reproduced.

Answer 4

True

Question 5

TF: Advertisements may not state or imply that an insurer, its financial condition, the payment of its claims, or the agent is recommended or endorsed by any state or federal governmental agency

Answer 5

True

Question 6

TF; If an individual is paid for making a testimonial, that fact must be included in the advertisement.

Answer 6

True

Question 7

The rules for illustrations apply to all group and individual life insurance policies except the following:

Variable life insurance;
Individual and group annuity contracts;
Credit life insurance; and
Life insurance policies with no illustrated death benefits on any individual exceeding $10,000.

Answer 7

True

Question 8

TF; Illustrations should contain the following basic information:

Name of Insurer;
Name and business address of the producer;
Name, age, and sex of insured;
Underwriting or rating classification upon which the illustration is based;
Policy’s generic name, company product name, and form number;
Initial death benefit;
Dividend option election or application of non-guaranteed elements, if applicable; and
Illustration date.

Answer 8

True

Question 9

The policy, the application, and any attachments or riders constitute the ____ ____ between the parties.

Answer 9

Entire Contract

Question 10

TF: The policy must provide that all premiums are payable in advance at the home office of the company that issues the policy or to an agent of the company on delivery of a receipt signed by at least one of the company officers designated in the policy.

Answer 10

True

Question 11

The policy must provide for a grace period of at least ___ ___ or _____ days for the payment of every premium after the first, during which period the policy will remain in full force and effect.

Answer 11

one month
31

Question 12

A policy in force for two years from its date of issue during the lifetime of the insured is _____, except for nonpayment of premiums.

Answer 12

incontestable

Question 13

The policy must provide that, in the absence of fraud, a statement made by an insured is considered a _____ and not a _____.

Answer 13

representation
warranty

Question 14

TF: The policy must provide that if the age of the insured has been misstated, the amount payable under the policy will be such as the premium paid would have purchased at the correct age.

Answer 14

True

Question 15

Unless the policy has been surrendered for its cash surrender value or unless the paid-up term insurance has expired, the policy will be reinstated at any time within ____ ____ from the date of premium default upon written application, evidence of insurability satisfactory to the insurer, and payment of all premiums in arrears with interest.

Answer 15

three years

Question 16

The policy must provide that settlement will be made upon receipt of or not later than ____ ____ after due proof of death of the insured and the right of the claimant to the proceeds.

Answer 16

2 months

Question 17

The policy must not contain a provision limiting the time for any legal action to less than ____ ____ after the cause of action.

Answer 17

two years

Question 18

TF: Any policy of life insurance may provide for the acceleration of death benefits in advance of the time such benefits would otherwise be payable upon the occurrence of a terminal or long-term care illness or injury. The amount of the accelerated benefit is deducted from the amount of the death benefit payable under the policy and any amount the insured would otherwise be entitled to convert to an individual contract.

Answer 18

True

Question 19

If a group policy is terminated and a person has been insured under the group policy for at least ____ years, the person is entitled to be issued an individual life insurance policy within ____ days of group policy termination. The individual policy will be issued with a face amount up to that provided by the group policy.

Answer 19

5
31

Question 20

___ ____ policies are taken out by a creditor to cover the life of a debtor. The policyholder is the creditor, and the debtor is the insured

Answer 20

Credit Life

Question 21

Credit life policies ensure the creditor is repaid the debt if the debtor dies. The policies cover the amount of the debt and are ______-term policies.

Answer 21

Decreasing

Question 22

The date of termination for a credit life policy may not be more than ____ days from the scheduled maturity date of indebtedness, except when extended without additional cost to the debtor.

Answer 22

15

Question 23

If the policyowner fails to make premium payments, the policy will lapse. _____ _____ protect the cash value of permanent life insurance policies (whole life, universal life, etc.) Insurers must provide at least one of the following _____ _____ (same):

Reduced, Paid-up Coverage;
Extended Term Coverage;
Shortened Benefit Period; and
Cash.

Answer 23

Nonforfeiture Options

Question 24

An entire life insurance policy in Texas consists of:
Select one:
a. Policy only
b. Policy, application and any attachments or riders
c. Policy and application
d. Application only

Answer 24

B

Question 25

After proof of death has been provided, how much time does a life insurance company have to pay the claim?
Select one:
a. 1 month
b. 2 months
c. 3 months
d. 6 months

Answer 25

B

Question 26

All of the following are true regarding advertising of life insurance policies in Texas, EXCEPT:
Select one:
a. Advertisements must contain the premium rate.
b. Advertisements must not be misleading.
c. Agents are responsible for the form and content of advertisements.
d. The full licensed name of the insurer must appear on the advertisement.

Answer 26

C

Question 27

Which type of life insurance policy is taken out by a creditor to cover the life of a debtor?
Select one:
a. Universal Life
b. Credit Life
c. Whole Life
d. Term Life

Answer 27

B

Question 28

If an insurer wishes to use illustrations in their advertisements they:
Select one:
a. Must notify the department of insurance that they are using illustrations when filing advertisements for review and approval
b. Must only use illustrations in the proper format and that contain the necessary disclosures pertaining to the basis of the calculations used in the illustration.
c. Must only use illustrations that have a basis of current, stated and official projections (i.e., interest, persistency, mortality and expense factors).
d. All of the above

Answer 28

D

Question 29

A life insurance policy in Texas must contain all the following provisions, EXCEPT:
Select one:
a. Assignment
b. Legal action
c. Incontestability
d. Settlement

Answer 29

D

Question 30

If someone dies during the group policy conversion process, before the individual policy takes effect, which policy pays?
Select one:
a. The individual policy
b. The group policy
c. The group policy and individual policy each pay half
d. A court must decide

Answer 30

B

Question 31

What is the grace period for life insurance policies in Texas?
Select one:
a. 7 days
b. 10 days
c. 15 days
d. 31 days

Answer 31

D

Question 32

Which of the following is a nonforfeiture option that will protect the cash value of a permanent life insurance policy in the event of lapse?
Select one:
a. Reduced, Paid Up Coverage
b. Shortened Benefit Period
c. Extended Term Coverage
d. All of the above

Answer 32

D

Question 33

What happens to previous premiums if a credit life policy is cancelled?
Select one:
a. It is up to the discretion of the insurer.
b. A portion of the premiums are returned.
c. All premiums are returned.
d. No premiums are returned.

Answer 33

D